Income Tax on winning lottery, crossword puzzles, game shows, horse race

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Sakshi Shah

Income Tax
Lottery Income
Last updated on November 30th, 2023

Winning games like KBC, Indian Idol, and many others is a dream come true for many, but some forget that the government also wants a share of the winnings. So, while imagining all the cool things you can do with your jackpot, it’s essential to know how taxes play into the picture. Income from winning awards and prizes such as lottery, puzzles, online gaming or TV game shows, card games, etc are considered as IFOS under the income tax. The winner may receive such income in cash or kind. Additionally, Section 115BB of the Income Tax Act charges the tax at a flat rate of 30%

Income Tax on Awards & Prizes

Individuals may earn such incomes in the form of cash, kind, or awards/prizes. The tax treatment depends on multiple factors.


If the Award of public interest is approved by the Government, it is exempt from tax. Awards such as National awards, Nobel prize, Arjuna award, Bharat Ratna award, etc notified by the government under Sec 10(17A) is exempt from tax in the hands of the receiver.
Awards such as Filmfare, ICC Cricket awards, etc are taxed as IFOS income since they are not approved by the Government


Prizes earned are taxable in the hands of the winner as Income from Other Sources income (IFOS) as per Sec 56(2) of the Income Tax Act. Income from betting, gambling, sports events, horse race, etc are all taxable incomes

Tax Rate on winning lottery, puzzle, game show, horse race

The tax on lottery winnings, crossword puzzles, card games, etc. is a flat rate of 30%. After adding the health and education cess of 4%, the effective tax rate becomes 31.2%. The income is subject to a flat 30% tax rate, disregarding tax slab rates. In case the prize is received in kind, the tax will be determined on the market value of the received item.


Ajay won a lottery and received INR 5 lakh in cash and a diamond ring worth INR 1 lakh. He also has a Fixed Deposit Interest income of INR 1 lakh. He has invested INR 1.5 lakhs in Section 80C and also paid INR 25,000 as mediclaim. Calculate the tax liability.

Particulars Amount (INR)
Income from Other Sources  
Fixed Deposit Interest  1,00,000
Winning from Lottery 6,00,000
Gross Total Income 7,00,000 
Deductions under Chapter VI-A (1,00,000)
Total Income 6,00,000
Tax at slab rate NIL
Tax at special rate (30%) 1,80,000
Total Income Tax 1,80,000
Health & Education Cess @4% 7,200
Total Tax Liability 1,87,200
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TDS on prizes & winnings

TDS under Section 194B is applicable on income from lottery, betting, gambling, etc. If the income exceeds INR 10,000 during the financial year, the prize distributor is liable to deduct TDS at 31.2% when making the payment.

TDS under Section 194BB is applicable on income from the activity of owning and maintaining horse races. If the income exceeds INR 10,000 during the financial year, the horse race organizer is liable to deduct TDS at 31.2% when making the payment.

ITR Form & Due Date

Special Provisions for tax on winning lottery, puzzle, game show, horse race

If a taxpayer has income from winning a lottery, puzzle, card game, gambling, etc., they need to consider the following points.


Is TDS on lottery winnings refundable?

No, the TDS paid for winnings from lotteries and game shows are non-refundable.

How should tax is caculated if the prize is paid in cash or kind?

Income Tax on winning the lottery, puzzles, card games, etc should be calculated at 31.2% of the total prize money. If the prize is paid in kind such as a car, jewellery, holiday trip, etc the tax should be calculated on the market value of the prize.

Do I have to pay tax if I withdraw my winnings on Dream11?

Yes, you have to pay tax on winning from Dream 11. Dream 11 will deduct tax at the flat rate of 31.2% on your net winnings and will transfer the remaining amount to your account.

Is rebate under Section 87A available in case of lottery winnings?

No, “Winnings from gambling, virtual digital assets (VDA), online gaming, lotteries, game shows or betting are not eligible for tax rebate under Section 87A.

Got Questions? Ask Away!

  1. Hey @HarishMehta

    No, Under Section 58(4), no tax exemption or deduction can be claimed on winning cash or assets as a prize from a game show, lottery, etc.

    You can read more about it here:

    Hope this helps! :slight_smile:

  2. Hi @Vitalstatics

    Only the net income from online gaming shall be taxable. However, no deduction in respect of any expenditure or allowances in connection with such income shall be allowed.

    Further, the provisions of the Income Tax Act, 1961 do not permit set off and carry forward of losses against gains from winning from lotteries, crosswords, puzzles, card games or other gambling.
    If your net winning from such gaming exceeds INR 10,000, they would deduct TDS at 30% and credit the remaining amount to your account.

    Hope this helps :slightly_smiling_face:

  3. Hey @Wolf_Roolf

    No loss can be set off against income from winnings from lotteries, crossword
    puzzles, card game, and any other game of similar nature. Thus, you must report income of INR 10,000 and pay tax on the same at the rate of 30%.

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